Northrop Grumman said it earned $173 million, or $2.47 a share, 66 percent more than the $104 million, or $1.50 a share, it posted in the year-ago quarter. Six analysts surveyed by First Call expected the company to earn $1.86 a share.

Operating margin of $314 million, a 45 percent increase from a year ago, included $150 million of pension income. Pension income is expected to total $600 million in 2000. Sales of $2.1 billion were flat from the first quarter of last year. See company statement.

Northrop Grumman said it is restructuring its business strategy to focus on high-growth areas of defense electronics, systems integration, and information technology. Its electronics unit won a series of key new contracts, which are expected to produce double-digit sales growth for 2000. Logicon, the company's information technology division, generated record sales for the quarter and is expected to reach double-digit growth rates this year.

"These engines of growth will continue to generate excellent results for our shareholders in 2000 and beyond," said Kent Kresa, Northrop Grumman's chairman, president, and CEO. "Based on today's operating results and the increased pension income for 2000, we now anticipate that our earnings per share for 2000 will be between $9.30 and $9.60."

Meanwhile, Newport News posted growth in earnings and revenue due to gains in the contractor's construction and engineering divisions.

Newport News said it earned $21 million, or 63 cents a share during the first quarter, a 26 percent increase from the first quarter of last year. First Call expected the company to earn 59 cents a share. Revenue rose to $469 million from $430 million a year ago.

Newport News said it earned key contracts from the U.S. Navy and delivered contracts, including maintenance of the aircraft carrier U.S.S. Enterprise, during the quarter. See company statement.

Free cash flow of $64 million was used to complete a $100 million share repurchase program and initiate repurchases under a new $100 million program authorized in February. It also allowed Newport News to pay down $30 million of debt.

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